The controversy and issues surrounding the exploitation of staff at 7-Eleven has demonstrated the need to strengthen existing laws. More specifically, this saga has exposed a widespread practice amongst franchisees of falsifying payrolls, threatening deportation and underpaying staff.
To address this problem, the Turnbull government has proposed a number of initiatives including an increase in penalties to act as a more effective deterrent for employers. They argue that a number of companies currently view the risk of underpaying staff as an acceptable cost and aim to end this perception by introducing penalties 10 times higher than the current maximum (ie, $10,800 for an individual and $54,000 for a corporation).
In addition, they propose new provisions to deal with the exploitation of staff by franchisees. Under the amended Fair Work Act, parent companies and franchisors will be held liable for any breaches of the Act by their franchisees and subsidiaries. These sections will only apply in situations where they should reasonably have been aware of the breaches and could reasonably have taken action to prevent them from occurring.
If re-elected, the Fair Work Ombudsman will also be empowered by new provisions to gather evidence where proper records do not exist. This attempts to address the state of fear that often inhibits vulnerable workers from speaking out about their employment conditions.
Employers who obstruct Fair Work Inspectors from performing their role, or who provide false or misleading information to these officials, will face new penalties as well.
The workplace watchdog will receive a funding increase of $20 million in order to enforce these provisions. Migrant workers in particular will receive added support through a newly developed Migrant Workers Taskforce within office of the Fair Work Ombudsman. This will be headed by former ACCC chairman, Allan Fels.
The 7-Eleven fiasco has shed light on the inadequacies of the Fair Work Act and is likely to be amended under the Turnbull Government. However, there are concerns as to how much pressure this will place on the franchising as a business model. The National Retail Association will continue to monitor this matter and keep retailers up to date with any proposed changes.
Dominique Lamb is Principal of NRA Legal and Director of Legal Services at the National Retail Association. The NRA can be reached at 1800 RETAIL (738 245).